The Wrong Fight Against SEM

Brian Pasch comments on why dealers need help on more things than telling them to fight SEM spending. There are other games to play.

Picking a Fight Against Paid Search

A great discussion broke out on DealerRefresh Forums and I was compelled to comment, but then it turned into a longer story! Ed Brooks used a “tried and true” technique to engage readers with the eBay study data, and it worked. Behind the eBay story was Ed’s point that dealers should investigate the ROI of branding keywords like buying their own name.

However, the discussion did not just stay on that one point, which is common when passionate professionals engage on DealerRefresh. There were so many points in the discussion that peaked my interest. So let me address a few of them to stir the pot (like Joe) and to add my perspective.

The Dataium Study with Cars.com

First, let’s discuss the Dataium study. I like the products that Dataium delivers to dealers and OEM’s and I respect their mission. However, I contend that the entire premise of the report is flawed. I think it actually is a step backwards in in helping dealers sell more cars at a lower cost. Also the data in this report does not match my experience working with hundreds of dealers and their analytics.

The Dataium study did have great data about audience overlap and the influence of Cars.com on dealership website traffic. I wish the study stayed on that topic; showing dealers the value of being part of the Cars.com platform. That would have been helpful in educating dealers why they should always have Cars.com as part of their sales strategy.

Picking The Wrong Fight

Dealers are spending their marketing dollars in significantly worse ways than on SEM, which deliver a poor ROI in regards to getting eyeballs on their inventory. Why the fight with SEM? Why not pick the fight with the $15,000 a month in newspaper, the $25,000 a month on radio, or the $40,000 on cable TV? How well are those investments generating VDP views on a dealer’s website and at what cost? Cars.com never needed this comparison; they deliver the lowest cost per VDP on the planet.

Of the dealers I work with, they are generally spending $3,000-$5,000 on Google Adwords per store, $3,000 on Cars.com, and $5,000 on Autotrader.com. This is an average and the premium packages offered by third party classified sites raise that number higher, depending on the local market.

With that said, these three investments are very good at producing VDP views at a reasonable cost. The premise of this article seems to want to pick a fight between dollars that could go to third party classified sites that are being funneled to SEM. That’s where the study lost me. All three should be “first in” dollars.

Dealers should be investing in all sources that produce effective VDP views; eyeballs on their inventory that is measurable. That can also include investments in SEO, online video marketing, and boutique sites like Craigslist.

The best that I can estimate, traditional media investments are at least 2-5 times more expensive than digital advertising in generating a VDP view on a dealership website. I recently conducted a webinar on measuring and generating VDP views, which DealerRefresh readers can watch on this link: Turning Dealers Into VDP Factories.

Looking at SEM Traffic and Budgets Claims

The dealers who have their Google Adwords campaigns (SEM, Display, Retargeting, Pre-Roll) under management at PCG see that their paid search traffic is much higher than 6% of their overall traffic; reported by Dataium. The article specifically referred to SEM, which to me is odd because dealers are not just buying keywords today. It makes the study’s focus on SEM to be contrived.

It is not just our work at PCG. I pulled up a Toyota dealer that is using Dealer.com TCD for paid search, and the traffic generated by the dealers $5,000 investment in search generated 21% of their overall traffic. The number of VDP views, generated by the digital spending targeting car sales, was excellent according to my benchmarks.

The Dataium article also said that of the “digital” investments being made by dealers, SEM was 55% of the digital budget and that 25% was classified advertising. The numbers Dataium reports are claiming that dealers are spending DOUBLE on SEM compared to what they are spending on third party classifieds.

Which dealers were used for this study? The dealers I work with, in most cases, are using BOTH Cars.com and Autotrader.com.The combined third party advertising budget total is often MORE than total digital spending on Google Adwords.

Using my averages on third party classifieds listed earlier, $8,000 a month for both platforms, I don’t know many dealers that are spending over $16,000 just on SEM; just keyword purchases of text ads. That’s correct, no banners, retargeting, or video pre-roll. So, go check what you are paying for Cars.com and Autotrader.com and double that number and see if your text ads on Google equal that number.

The numbers don’t add up. It seems like a deliberate attempt to put down digital advertising, which I contend, should never have been a fight worthy of discussion. Cars.com generates VDP views at a very low cost and dealers should appreciate the beauty of that platform on its own.

Traffic Generated By Dealership Names

The Dataium study also claims “78.6% of search engine referral traffic resulted from search terms that were a variation of the dealership name.” I also have to challenge this number. Was this statistic elevated by dealerships that have names that are related to a city, for example “Toyota of Orlando”? Consumers searching for an OEM brand in a city is very common. We have to separate that search from a branding related search.

When you eliminate dealerships that don’t share the name of a city, I have a hard time getting to a number higher than 60-65%. I understand the reason why this number looks exciting at nearly 80% of search traffic but it feels also contrived. I encourage readers to check their own analytics and see what percentage you see for dealership names that are not also cities.

It is clear from a joint study I did with Autotrader, using shared customers of PCG, that consumers often use Google as a phone to get to the dealership’s website. In the Autotrdaer.com study, 70% of customers who where on Autotrader.com and visited a dealership website used Google to jump to the dealership’s website instead of clicking on the “View Dealer’s Website” button on a VDP.

The majority of those people used the dealership’s name in that search, which I consider to be pre-qualified traffic with a direct intent in confirming what they saw on Cars.com or Autotrader.com.

The influence of third party classifieds on organic search that uses a dealership name is clear. Some estimates would say that 30-50% of dealership name searches are influenced by a visit to third party classified sites.

So back to Ed’s point, if this traffic is pre-qualified, should a dealer be buying their name in paid search? If the consumer was just on Autotrader.com or Cars.com, won’t they seek out your link in the organic listings if you are not in the top SEM results?

The answer to this is not cut and dry. Often it depends if local competitors are buying the dealership name in their SEM campaigns. Also, in some regions, multiple dealers are in the same city. There are two Toyota dealers that can claim to be in Orlando, so they both buy combinations of the dealer’s name “Toyota of Orlando”.

I do think that dealers should do a test to see if they allocated the SEM dollars invested in protecting their name to another digital strategy, but it would take courage. I’m not sure how many dealer principals would support that 90-day test, but it would be interesting for sure.

Cutting Third Party Classified Advertising

The DealerRefresh forum also noted dealers who are testing a complete or partial exit from third party classified sites to see if their traffic takes a hit. Basically they are confident that they will sell the same number of cars without being on Cars.com, Autotrader.com, KBB.com, etc. I wonder how many of these same dealers have exited traditional media with such confidence.

Google’s research on what is referred to as the Zero Moment of Truth (WMOT – ZMOT) clearly states that over 18 websites are used in researching a car purchase before contacting a dealer or walking in as a fresh up. It is odd to me that a dealer would cut placing their cars on the top destinations for classified advertising when so much research is being done online.

Do consumers get bored and visit Cars.com, Autotrder.com, and KBB.com for the experience even though they have no intention of buying a car? If I had to cut $5,000 a month from my marketing budget I would be looking at investments that have poor visibility in generating a clear ROI and/or a high cost per VDP view.

Watch For The PreText

For the record, Autotrader.com and Cars.com does not perform equally in all markets. Dealership pricing and merchandising impact the effectiveness of third party classified sites. If dealers are pricing their cars competitively, fully merchandising their listing, third party classified sites help to connect eyeballs to inventory. I would read the recent study by Cobalt on why that is important to inventory turn.

In conclusion, Big Data research can be very valuable in giving us insights into the consumer shopping experience. Recent studies from Cobalt, Dataium, Cars.com, and Autotrader.com all have very good elements that can refine a dealer’s digital strategy. However, we must be careful about reading studies without putting the facts to the test. As Joe Pistell added, look for the pretext.

Many do not give credit to their $40,000 traditional advertisement. GA will only tell you part of the story (most importantly the part they want you to see with regard to PPC. eBay just released a study that completely contradicts this completely. PPC dollars are almost completely wasted by “most’ dealers. They have no strategy and even when strategy exists what is the true ROI on those dollars?

True ROI,
Since I’m not sure who you are or where you are coming from, the eBay study and my article are not talking about the same thing. When you track leads, phone calls, and follow-through conversions from paid search investments, the ROI is very strong when competent campaigns are setup. In fact, the latest updates to Adwords which includes free phone tracking numbers from Google, is exploding with tracking quality calls generated from PPC campaigns. You can defend traditional advertising, and it has a place in a comprehensive marketing campaign, but PPC is not the biggest waste in dealer marketing budgets by far.

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Editors

Jeff Kershner

I’m the founder of DealerRefresh. I got my start in the dealer business when I was 18. From there I've worked throughout several departments within fixed to variable ops. Whether it’s managing the desk, perfecting sales process or studying online marketing and media trends, I absolutely love this business and the challenges it brings. On top of keeping up with DealerRefresh, I consult with dealerships and key industry businesses. My passion has been and continues to be helping dealers leverage new media to sell and improve customer service.

Alex Snyder

Alex was born into the car business. His family owns a group of stores in Virginia where he held a multitude of positions since he first cut the grass there in 1989. DealerRefresh caught his attention in 2006 and he has been a part of the community ever since. In 2010 Alex joined Dealer.com to help put a dealer's spin on products; where he got a front row seat to converse with over 13,000 dealers and watch 2 acquisitions totaling over $5 Billion. Today, Alex lives in Vermont and works to make DealerRefresh amazing!